HMRC has confirmed that the mandatory payrolling of benefits in kind (BiK) will now be introduced from April 2027, rather than April 2026 as originally planned.
The decision provides employers and payroll teams with an extra year to prepare for the change.
Although the requirement is delayed, employers may still choose to payroll benefits on a voluntary basis. Those who registered to do so before the 6 April 2025 deadline for the 2025/26 tax year can continue under the existing arrangements. Employers wishing to payroll benefits for the 2026/27 tax year must register by 6 April 2026.
The decision to delay follows consultation with stakeholders, which raised concerns about whether employers and payroll software providers would be ready for the original deadline. HMRC has acknowledged the practical challenges involved and is offering additional time to support a smoother transition.
The long-term aim remains unchanged. HMRC plans to move away from annual P11D reporting in favour of real-time reporting through payroll. Once in place, the new system should reduce administrative burden, improve tax code accuracy, and simplify processes for both employers and employees.
Employers who have not yet signed up for voluntary payrolling are encouraged to consider doing so ahead of the mandatory rollout. Early adoption allows time to test systems, resolve any issues and get staff used to the new approach.
HMRC has said it will continue working closely with payroll software developers and employers throughout the extended implementation period to ensure that the transition to mandatory payrolling is as straightforward as possible once it takes effect.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
